Elon Musk has weighed in on the Federal Reserve again, in an update on Twitter that brought back his concerns that the central bank may slash the worth of the entire stock market.
The Tesla boss was responding to a tweet that highlighted the White House’s attitude towards diversity when it comes to the Vice Chair of the Fed, to succeed Lael Brainard.
“Maximum skill with monetary policy is extremely important in this role!” Musk tweeted on Thursday.
“A bad Fed decision affects the lives of everyone.”
The US central bank has increased its interest rate for the key period from close to zero to nearly 5 percent over the last year, as a way to reduce inflation, which is currently at historical levels. This has made the cost of mortgages, car loans and credit cards more costly for Americans.
However, Musk -the director of Twitter and SpaceX in addition to Tesla has been focusing on the effect on the stock market when he spoke about the potential risks of the Fed’s tightening of monetary policy. Musk warned in January that its rate hikes are abrasive and could devalue the stock market as a whole as it discourages investors from diving into these markets.
The tech billionaire has claimed that the central bank’s rate hikes for Tesla’s poor performance in 2022. the stock of the electric vehicle maker plummeted by to 65%, erased $600 billion of market value.
The Fed’s rate increases are considered to be an obstacle for stocks as putting cash in a reinvestment that earns interest rather becomes attractive. Prices for stocks also tend to decline when interest rates rise due to the fact that the higher levels away at the future cash flows that make up the basis of a company’s value.
Musk’s latest remarks come after Fed minutes from the last meeting indicated that it is expected that the bank will keep raising rates in the coming yearshattering the hopes of investors that are awaiting an ease in the policy.